P4,800,000. By December 31, 2021, the end of its 2021 reporting period, Shipx Co. had provisional fair values for the following items: • Trading rights in other foreign territories of P600,000. These had an average remaining useful life of 5 years at the acquisition date. The acquisition date fair value was finalized at P300,000 on September 30, 2022. • Trademarks effective in certain foreign territories of P400,000. These had an average remaining useful life of 10 years at the acquisition date. The acquisition date fair value was finalized at P500,000 on March 31, 2022.
P4,800,000. By December 31, 2021, the end of its 2021 reporting period, Shipx Co. had provisional fair values for the following items: • Trading rights in other foreign territories of P600,000. These had an average remaining useful life of 5 years at the acquisition date. The acquisition date fair value was finalized at P300,000 on September 30, 2022. • Trademarks effective in certain foreign territories of P400,000. These had an average remaining useful life of 10 years at the acquisition date. The acquisition date fair value was finalized at P500,000 on March 31, 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
3
![On July 1, 2021, Shipx Co. acquired Cleansify Inc. that resulted to goodwill in the amount of
P4,800,000. By December 31, 2021, the end of its 2021 reporting period, Shipx Co. had provisional
fair values for the following items:
• Trading rights in other foreign territories of P600,000. These had an average remaining useful life
of 5 years at the acquisition date. The acquisition date fair value was finalized at P300,000 on
September 30, 2022.
• Trademarks effective in certain foreign territories of P400,000. These had an average remaining
useful life of 10 years at the acquisition date. The acquisition date fair value was finalized at
P500,000 on March 31, 2022.
By what amount the 2021 net income, be increased or decreased by the provisional fair values of
trademarks and trading rights?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe4ce6bfa-fcd0-4377-a96a-21495d57c26b%2Fafac03a0-bc51-4496-b6b9-bd1f009b1c89%2Fwgokr87_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On July 1, 2021, Shipx Co. acquired Cleansify Inc. that resulted to goodwill in the amount of
P4,800,000. By December 31, 2021, the end of its 2021 reporting period, Shipx Co. had provisional
fair values for the following items:
• Trading rights in other foreign territories of P600,000. These had an average remaining useful life
of 5 years at the acquisition date. The acquisition date fair value was finalized at P300,000 on
September 30, 2022.
• Trademarks effective in certain foreign territories of P400,000. These had an average remaining
useful life of 10 years at the acquisition date. The acquisition date fair value was finalized at
P500,000 on March 31, 2022.
By what amount the 2021 net income, be increased or decreased by the provisional fair values of
trademarks and trading rights?
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